Top 5 Credit Misconceptions

We have all heard the rumors...from neighbors, relatives, or friends. A wide variety of myths float around about what you should and shouldn't do to manage your credit. Credit Karma has exposed these urban legends to provide you and your informers with the truth about credit:

Your score will drop if you check your credit - Fortunately, this one is definitely not true. Checking your own report and score is counted as a "soft inquiry" and doesn't harm your credit at all. Only "hard inquiries" from a lender or creditor, made when you apply for credit, can bring your credit score down a few points. Worried about damaging your credit while shopping around for a loan? Multiple inquiries for the same purpose within a short amount of time (a few weeks) are grouped together into a less damaging period of inquiry.

Closing old accounts is a good idea - To close or not to close, that is the question. Many people advocate closing old and inactive accounts as a means of managing their credit. But they should think twice before closing the oldest account on their credit reports. Canceling old credit accounts can lower a credit score by making the credit history appear shorter. If you want to reduce your levels of available credit, ask for your credit limits to be lowered or close newer accounts instead.

Once you pay off a negative record, it is removed from your credit report - Negative records, such as accounts in collections, bankruptcies, and late payments will remain on your credit reports for 7-10 years. Paying off the account before the end of the set term doesn't remove it from your credit report, but will cause the account to be marked as "paid." It is still a good idea to pay your debts, just be aware that the major change in your report won't come until the negative records expire.

Being a co-signer doesn't make you responsible for the account - When you open a joint account or co-sign on a loan, you are taking on legal responsibility for the account. Any activity on these shared accounts, good or bad, will show up on both people's credit reports. If you co-sign for a friend's auto loan and they don't make the payments, your credit profile will be hurt by their actions and vice versa. The only way to stop this double reporting is to refinance the loan or to have the creditor officially remove you from the account.

Paying off a debt will add 50 points to your credit score - Your credit score is calculated using a complex algorithm that takes into account hundreds of factors and values. It is very hard to predict how many points you can gain by changing one factor. For a person with a high credit score, just one late payment can cause a significant drop. If a person has a low credit score, it may not cause a large drop at all. Just keep paying your bills on time, reducing your debts, and removing negative inaccuracies from your credit report. Good financial behavior and time are the two most important factors for your credit score.

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Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.

Love this site so far. I just ran my credit score (it's 609)and have also pulled all 3 credit reports. I am at the tail end of paying off my credit card debt in which most cards went into collections. I have one more to settle but have two judgements that have been paid off within the last 5 months yet they are still showing as unresolved on my credit reports. How can I change this and what effect will it have on my credit score once they are shown as being settled?

You have to contact who ever the judgement was for ( or their attorney ) You can get a form from them that is signed and dated. Then "YOU" have to take it to the court house where the judgement against you was filed with that signed and dated paper saying that the judgement has be satisfied. You may have to pay a small fee when you do this but you should be able to get a copy showing the judgement was satisfied. It may stay on your credit but it should change from owing to being settled.

call the credit company and make sure thier records are updated.It could take 4-6 weeks before you notice something. Also you should dispute it on ur credit report. Then the credit reporting company will verify your balance with the company.Setteling ur debt is more of a punishment than a reward like it should be. After my divorce my ex-husband got our truck the bank forclosed. I thought it would help me to settle with the bank. It stayed on my credit for 10 years, hurting me drastically on getting lower interest credit cards. I'v even been turned down for credit because of the duragatory account. If I would have filed bankruptcy then it would have fell off in 7 years. I was punished an extra 3 years for being with a ****head. Pardon my language!!

I filed for Chapter 13 over a year ago. My credit score is 598. How can I improve my score. I am paying back 80% of the plan and I have never been late. I have a car payment that I pay monthly through the court.

I went through exactly what you did many years back. What helped me was a secured credit card..maybe a couple hundred dollars. Use it to buy groceries, gas..things like that and pay it off every month. Unfortunately, you have a long road ahead of you but you will recover. It all starts with one account and build on it. You'll get there..

My question is where is the proof that this is true? I got a report from True Credit and it is like 90 points difference than here, with both being from Trans union someone is not getting all the right info here.

Same here...when i saw my score here i panicked and paid $14.99 to annualcreditreport.com (i just checked it a few months ago, so i had to pay this time) for a report to check it w/ all three beureaus and there was a 70-100 points difference. Phew, that was a big scare, i don't know why the big difference, the number here is pretty surprising/depressing.

i filed for bankruptcy back in March and in June i received my discharge papers. Shortly after (weeks later) i checked my credit score and to my surprise my credit was 655. I decided to apply for a credit card and guess what, i got approved. i certainly wont spend out of control but happy that i was approved. don't understand much about the credit scale anymore.

this same thing happened to me. i applied for a plaza tire card thinking i wouldnt get it.... i did! the limit was 800. i used it ONLY WHEN I HAD THE CASH TO BACK IT, then two months later applied for an orchard bank, got it also only limit is 300. same only used when have cash, about three months of using these cards at 25 to thirty dollars a month i applied for a capital one card, again i got it, no intrest till june 2011! if you pay in full every month the intrest wont hit your card! also as an update i just recently found out my plaza limit was raised to 1200, i didnt ask them to do it so that was nice, feels amazing to FINALLY be on right track. For you who dont know what plaza tire card is, firestone has same thing, there the same card, i HATE paying someone to work on my car but i only used it for oil changes and small stuff to improve credit